Analysis II: The Signalling and Screening Methods of Economic Analysis

Analysis II: The Signalling and Screening Methods of Economic Analysis

Assignment 6. (Analysis II: The Signalling and Screening Methods of Economic Analysis)

Paper details

Using either the signaling or the screening economic theory as an analytical tool as in Bridget’s letter in “Dear Undercover Economist” page 14, write a two-page analysis of a situation that you identify. This could be something that happened to you or to somebody else, you have noticed in a movie, news, or literature or you have observed in business. You may wish to review Chapter 5 in “A Sequence for Academic Writing.” The following parts should be easily identifiable in your essay:

 

An introduction summarizing the situation you wish to analyze. This part may need some data to show that the situation exists or may exist and that it is worth analyzing.

A section defining and describing your method of analysis (signalling or screening). Explain why it is appropriate in your situation. You may need to provide some citations to show how the concept has been used to analyze similar issues.

Identify the elements in your situation that would correspond to the elements of the definition: who is the agent, who is the principal, what is the signal, what is the cost of the signal for the two types of agents (he high-type and the low-type agents)

The signal should be too costly for the less able agent, but not too costly for the more able agent.

Make a recommendation about how the signal should be chosen so that it can separate the two types of agents.

What are the limitations of your analysis and what might make your recommended course of action go wrong? What other approaches to studying the problem may lead to different conclusions or recommendations?

Avoid using scientific jargon− address an audience like yourself: students who have taken a few introductory courses in various subjects

 

 

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